The next challenge for eConveyancing: interoperability
This article is the second in our property law series, reporting on the latest issues for property law practitioners.
With a second Electronic Lodgement Network Operator (ELNO) now in the soft launch phase in NSW and the COVID-19 pandemic putting the spotlight on all things digital and remote, we take a closer look at how eConveyancing will work with more than one ELNO in the market.
Transitioning to eConveyancing: the next challenge
We are now well along the NSW Government’s timeline for transitioning to eConveyancing, with all mainstream property dealings now required to be lodged electronically at NSW Land Registry Services (NSW LRS).
To be able to lodge dealings electronically, a practitioner must become a subscriber to an ELNO (which provides electronic lodgement services). Only registered subscribers can lodge dealings electronically at NSW LRS.
PEXA, which formed in 2010, was the first ELNO to operate in NSW. While it still effectively has 100% of the market, Sympli, a collaboration between InfoTrack and ASX, is a new ELNO which was approved to operate in NSW on 1 July 2019.
A significant challenge, though, as identified in IPART’s draft report examining the pricing framework for electronic conveyancing services in NSW, is that “competition is hampered by ELNOs' inability to interoperate with each other in transactions involving multiple parties”. Without interoperability, practitioners have to use the same ELNO to complete a property transaction.
Interoperability and eConveyancing
Interoperability is the ability of ELNOs’ systems to “speak” with each other, allowing each party in the settlement process to use an ELNO of their choice. IPART found that interoperability would allow practitioners to choose their preferred ELNO. It would also promote competition, innovation and lower costs by permitting ELNOs with a smaller subscription base to compete.
In examining how interoperability would work in this context, IPART analysed four interoperability solutions, comparing their potential to promote competition and their costs. It concluded that building direct connections between ELNOs is the preferred approach and that the additional costs to the ELNO market as a whole are small and are outweighed by the benefits.
IPART recommends that the regulators should mandate the establishment of a direct connection between the existing two ELNOs and implement a framework which allows new entrant ELNOs to choose between connecting to the existing infrastructure or developing their own infrastructure and establishing direct connections with other ELNOs in the market.
Where to next?
IPART submitted its Final Report and recommendations to the Minister for Customer Service in November 2019. In December 2019, Australian Competition & Consumer Commission (ACCC) published a report on the emerging eConveyancing market, recommending interoperability be identified as a pro-competitive market model and “a direct connection between the two current ELNOs be implemented as soon as possible to promote competition.”
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